Civil Transactions Law (15): Indirect Action (Subrogatory Action)

The Civil Transactions Law encourages the fulfillment of contractual obligations to ensure stability in dealings among individuals. The Law provides several guarantees to ensure the debtor fulfills their obligations. Among these is what is stipulated in Article 182 of the Civil Transactions Law, which allows creditors to exercise the rights of their debtor, commonly referred to as the indirect action (or subrogatory action).

Note: All of the debtor’s assets serve as general security for the satisfaction of their debts. All creditors rank equally in this security, and no creditor has priority unless expressly provided for by law.

Provisions of the Indirect Action

1. Every creditor is entitled to exercise the rights of their debtor, unless such rights are personal in nature or exempt from attachment, provided that the debtor has failed to exercise these rights and such failure may lead to an increase in the debtor's liabilities relative to their assets.
2. The creditor is not required to formally notify (put in default) the debtor before exercising the debtor’s rights. However, if a claim is brought in the name of the debtor, the debtor must be joined as a party to the proceedings.
3. The creditor acts as a representative of the debtor in exercising such rights. Any benefit arising from the exercise of these rights shall accrue to the debtor’s estate and shall serve as security for all of the debtor’s creditors.

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